Prime Minister James Callaghan and Conservative Party leader Margaret Thatcher, began baiting each other last week in the ritual dueling that signals an approaching election here.

But beneath the political fun and games, and the parliamentary cut and thrust, something quite serious may also have taken place.

Incomes policy - limits on wage increases to help control inflation - has been given grudging, but implicit support by its most strenuous opponents here - the leaders of Britain's unions and Thatcher herself.

This development, went almost unnoticed in the political by play. Callaghan started it on Tuesday, at the end of a speech on the economy with a 15-minute personal assault on the Conservative leader.

He accused Thatcher of arousing "prejudice . . . division . . .," and of making "ill-prepared . . . indefensible . . . frequently contradictory" speeches. Instead of a foreign policy, he said, she appealed to "prejudice and dislike." Above all, "the Right Honorable lady is insulting the intelligence of the British people with her one-sentence solutions to deep-seated problems."

It was rip-snorting stuff and Labor's backbenchers roared with glee.

Callaghan usually likes to appear as the healer, the man above the battle. But he knows his best issue can't be his government's economic performance. It just might be the personality of Thatcher, who often comes across as shrill and abrasive.

Thatcher did not reply in kind. She has a new political adviser. Saatchi and Saatchi Ltd., an advertising agency, and it has obviously told her to play up the stateswoman and play down the scrapper.

So Thatcher took the higher road, pounding at her best issue, the government's economic record. Under 13 years of Tory rule to 1964, she recalled, growth averaged 3 percent, inflation 4 percent and unemployment 2 percent.

Under Labor, incomes have fallen for three years, inflation has soared and unemployement has climbed above 6 percent.

Statistics don't yield cheers, and her backbenchers were silent.

She was not addressing them, however, but voters at large. So the speeches, broadcast live from the House of Commons, probably helped both contenders.

Callaghan does not intend to choose an election date until the end of his vacation in August. But almost everyone, including his own entourage, here now assumes he will call elections in October.

There is, however, a slim chance that Callaghan will try to postpone a vote until the spring. Recovery has been under way here since the start of the year. The greater the distance Callaghan can put between the three years of slump and an election, the better Labor's chances.

In February, moreover, the government publishes a fresh voting list that will make 800,000 new 18-year-olds eligible to cast their first ballot. Labor strategists believe they do better among the young than the old, and the February list could be worth five parliamentary seats.

Callaghan heads a minority government that hangs on only by finding allies from third parties on key votes. So far, it has been successful.

One day last week, for example, it picked up enough Scottish Nationalists' votes to pass a bill curbing increases in dividends. This measure, more symbol than substance, was thought necessary to persuade unions that incomes policy, restraining wages, is fair.

Whether Callaghan can continue to collect allies will help determine the election date. So will his calculation of when his party is likely to make its strongest appeal.

But whoever wins the next election is now likely to use incomes policy as a technique to square the economic circle - to restrain inflation without increasing unemployment.

Until now, Thatcher has appeared as a resolute, free enterprise opponent of the technique, insisting on what she calls "free collective bargaining." Last week, however, she apparently began to see herself in 10 Downing Street and took a different line. On the surface, she attacked the government's announced target - wage increases of 5 percent - was too rigid. It unfairly punished companies that could give more. It did not encourage productivity.

The important point, however, was what she did not say.

She did not attack the concept of a government-set wages target nor did she repeat the old calls for free-wheeling bargains. She seems to recognize, at least implicity, the virtue of guided restraint in an economy where unions and corporations exercise economic power.

Those other great foes of the technique, the union chiefs, also presented a blander face. They have already swallowed three years of incomes policy, and are now reconciling themselves to it as a continuing feature of the landscape. In private, one of the most important union leaders, a man who daily must balance between right and left, says that most of his colleagues accept this.

In public, the words are deliberately ambiguous. In a point statement with Labor Party leaders, the union leaders agree "that there must be each year a thorough discussion [between the government and] the trade union movement" on wages.

In a separate statement, however, the union leaders declared "they did believe that it was necessary or would be productive to give general or specific guidance on the level of pay settlements."

The two positions are at best inconsistent. The union leaders with great reluctance are coming to accept an incomes policy.

This reflects several things Leftists see the technique as a plot to shore up capitalism; many workers on the shop floor think they also ought to get whatever they can. Above all, the policy diminishes the traditional role of any union - bargaining for the maximum obtainable pay.

However reluctant, both the unions and Thatcher must be impressed with the way in which Britain's roaring 30 percent inflation was reduced by three-fourths, thanks in considerable measure to three years of incomes policy.

So, in the end, the election here and its winner may be far less significant than the widening support for a technique of economic management that is becoming standard throughout all of Northern Europe.